To reduce churn by more than 2 percentage points, you have to raise product value and usage

From Churn is the single metric that determines the success of your subscription service by David Packman:

“There is a laundry list of optimizations subscription services implement to improve retention, and collectively these have a positive effect—re-billing insufficient fund accounts on the 15th and 30th of the month, allowing members to pause their service, allowing members to reduce the frequency of delivered goods, winback campaigns to churned members, etc.

But a key observation about businesses which show high churn in their early stages is that the churn will not meaningfully reduce. That is, you can expect your optimization efforts to maybe move churn 1% — 2% (absolute points) or so, but they will never halve churn or reduce it dramatically beyond this. This is because churn is a statement from your customers about how habitually valuable your service is to them. In my experience, the only way to meaningfully reduce churn in high-churn businesses is to essentially redesign the service and the value proposition.

For clarity, I have looked at close to a hundred subscription services and have never seen churn improve from, say, 12% a month to 7% a month without fundamentally changing the service…but I have seen it move from 12% to 10% or thereabouts through optimization.”

Notes:
(1) Re. “Churn is a statement from your customers about how habitually valuable your service is to them” — see The relationship between frequency of habit and customer retention.
(2) The optimizations which David Packman argues have limited ability to reduce churn do not address insufficient product usage. For an alternative approach, see How to reduce churn by identifying your “red flag metrics”.
(3) We’ve raised retention for Seeking Alpha Premium by (i) identifying our most valuable product features, and (2) redesigning the product UX to increase the usage of those features. For example, our ranking of the top stocks in each industry is valuable because it enables investors to discover stocks which subsequently outperform the market, so we’ve redesigned our product to increase usage of those rankings.